Portland - Groupon rose the most since December 2012 after third-quarter profit beat analysts’ estimates and the company said it would seek partners to help expand its businesses in Asia.
The company said it hired advisers to evaluate financial and strategic options that could unlock shareholder value, citing the growth opportunities for South Korea’s Ticket Monster and the rest of its Asian operations.
Chief executive Officer Eric Lefkofsky said the company is focused on finding partners instead of selling some of the businesses completely.
As the company tries to transform from a daily-deal e-mails to a full-blown e-commerce site, the third-quarter results showed management’s execution is improving, Arvind Bhatia, an analyst at Sterne Agee, wrote in a research note today.
Groupon reported third-quarter earnings of 3 cents a share, excluding some items, topping its own forecast and the 1-cent average estimate among analysts.
“We largely delivered on all our objectives,” Lefkofsky said.
“I think people will say Groupon has been largely turned around now.”
Groupon shares rose 22 percent to $7.31 (R81) at the close in New York, the highest closing price since April.
Before today, Groupon had fallen 49 percent this year.
Lefkofsky is trying to take on the likes of Amazon.com by transforming Groupon into a website offering thousands of discounts.
While Chicago-based Groupon has been adding new features like a grocery loyalty program and listings of local businesses, customers had been slow to embrace the company’s shift.
Asia Sales
For the third quarter, sales rose 27 percent to $757.1 million, exceeding the $749 million average estimate.
Revenue categorised as “rest of the world” -- which is everything outside the US, Europe, the Middle East and Africa -- rose 26 percent to $108.5 million in the third quarter, accounting for 14 percent of total sales.
Customer purchases in those countries rose 155 percent.
“We are starting to evaluate what we should be doing in those emerging markets,” Lefkofsky said yesterday in a phone interview.
“There are certain countries where we’d benefit from a partner.”
Groupon agreed to buy e-commerce marketplace Ticket Monster in South Korea less than a year ago for $260 million.
On a conference call yesterday with analysts, Groupon specified that it isn’t looking to sell all of Ticket Monster.
Currency Swings
The company forecast fourth-quarter earnings of as much as 4 cents a share, excluding some items, saying that “significant movement” in foreign-exchange rates is limiting profit.
Analysts were expecting 7 cents a share on average.
To accelerate growth, Groupon introduced a number of new features in the last few months. It introduced Pages -- more than 7 million listings of merchants, complete with their business hours, links to their websites, ratings and helpful tips from customers.
Groupon also updated its iPhone app to include Apple Pay, which lets app users make payments by scanning their fingerprints.
Another mobile feature, Snap by Groupon, is a free app that pays people cash for buying select grocery and other items every week from any retailer in the US and Canada.
“They’ve done a lot of investment to try to turn around their business,” Edward Woo, an analyst at Ascendiant Capital Group, said before the results were released.
Groupon will host its first analyst day on November 11 in Chicago.
“We think these results will put the stock back on the radar screens of at least some investors that had essentially written-off the story,” Bhatia wrote.
“The upcoming investor day should be helpful in highlighting the long-term aspects of the story.” - Bloomberg News